UniCredit lifted by possibility of asset sales boosting capital

MILAN, May 20 (Reuters) - UniCredit shares rose on
Friday on expectations of the Italian lender selling stakes it
holds in other banks to shore up its capital, reducing the need
to issue new shares.

The bank is reviewing its assets and could end up trimming
stakes in online broker FinecoBank, Poland's Bank Pekao
and Turkey's Yapi Kredi, a source with
knowledge of the matter told Reuters on Thursday.

UniCredit is also sounding out potential buyers for its
payments processing operations, sources familiar with the matter
said.

UniCredit faces concerns about low capital levels and has
begun looking to replace Chief Executive Federico Ghizzoni after
pressure this week from key shareholders who are disappointed by
the bank's earnings.

Two sources close to the matter said on Friday an
extraordinary board meeting on governance issues had been called
for May 24.

Analysts estimate the bank could need between 5 billion and
8 billion euros ($9 billion) in fresh capital, adding the
appointment of a new CEO could pave the way for an eventual
share issue.

Cutting some of the holdings would dilute UniCredit's
earnings, while simply delaying a capital increase that would
still be needed later on, a Milan-based trader said.

The three units are estimated to have accounted for some 44
percent of UniCredit's net profits last year.

The stock has lost 43 percent so far this year,
underperforming a 36 percent drop in Italian bank stocks
.

Sources told Reuters that shareholders were aware that
uncertainty was damaging for the bank. Market expectations are
mounting in Italy that a solution could emerge between June 1,
when several of the bank's internal committees meet, and a board
meeting on June 9.

European banks are under pressure as negative interest rates
dent earnings. Italian lenders have also been hit by worries
about 360 billion euros of bad loans that resulted from a
three-year recession, dragging on their capital.

UniCredit said earlier this month its best-quality capital
stood at 10.5 percent of assets at the end of March, just above
a European Central Bank (ECB) requirement of 10 percent and well
below a level of 12.9 percent at rival Intesa Sanpaolo.
($1 = 0.8917 euros)
(Additional reporting by Gianluca Semeraro and Paola Arosio,
editing by Alexander Smith and Elaine Hardcastle)